Boosting Profitability with ERP in the Sheet Metal Industry

The sheet metal industry exists in a highly competitive environment defined by accuracy, efficiency, and cost control. The need for improved profitability is clear for manufacturers, who are challenged with tight margins and complex job production. Manufacturers continuously look for methods to optimize operations and increase profitability. This is what an ERP system can do; it will transform the approach to managing all aspects of a sheet metal business, from inventory control to scheduling production.

Why Sheet Metal Manufacturers Need ERP Systems

Sheet metal fabrication is an elaborate process that requires real-time collaboration among several internal departments. Using traditional management techniques often results in mistakes that create excess costs, delays in production, and continuous missed opportunities.

Some of the challenges that sheet metal manufacturers encounter are:

·     Working with complex bills of materials that may include several different components and variations. 

·     Tracking raw material inventory of various grades and gauges. 

·     Managing production schedules in concert with deadlines from customers. 

·     Waste control and optimizing material usage. 

·     Making sure job costing is correct for each job. 

An ERP system addresses the pain points of sheet metal machining by providing a singular platform that allows every business process to effectively communicate together and gives you the visibility and control to be profitable.

How ERP Systems Drive Profitability in Sheet Metal Operations

Optimized Material Management

Material costs usually account for 40-50% of the total costs associated with processing sheet metal. ERP solutions will change the way in which you currently manage materials, with real-time tracking of your inventory, automatic reordering, and new nesting algorithms that reduce waste.

The system will track all sheets, coils, and parts throughout your facility, so you always know what you have and where it is throughout your facility. This visibility will help reduce both production delays due to products being out of stock and excess inventory, which ties up valuable funds.

Enhanced Production Planning and Scheduling

Enterprise Resource Planning (ERP) systems leverage production capabilities through:

·     Planning machine capacities in real time to minimize bottlenecks 

·     Intelligence for job sequencing based on available materials and deadlines 

·     Automatically adjusting job scheduling if priorities change 

·     CNC integration to create a process flow 

·     Realistic lead time calculations that improve customer satisfaction 

Manufacturers can maximize production schedules and therefore increase machine utilization by approximately 15-25%, and do this without capital investment. 

Accurate Job Costing and Quoting

Profitability starts with accurate quotes. ERP systems maintain all costs in databases, including material prices, labor rates, machine time, and overhead allocation. This means every quote is based on the real cost plus a margin that remains competitive. 

In addition, the system captures the actual costs compared to the estimates in real time, giving you important information that will help improve your future quotes. This transparency also helps you know which jobs and customers provide the best return and allows you to make any necessary business decisions with confidence.

Key ERP Features for Sheet Metal Manufacturers

Advanced Inventory Control

The latest ERP systems enhance inventory management specifically for sheet metal operations. They track remnants and offcuts, making it simple to repurpose scrap for an upcoming job instead of purchasing stock.

They also track inventory across multiple locations, track material certifications, and maintain traceability as part of quality control and regulatory compliance.

Quality Management Integration

Quality assurance features include:

·     Tracking inspection points of production

·     The ability to track non-conformance reports and corrective action

·     Generating a certificate of compliance for your customers

·     Application of statistical process controls to evaluate settings within tight tolerances

·     Providing your company with the ability to track supplier quality to maintain standards.

All these capabilities can help you reduce rework and scrap while also helping you protect your reputation for providing the highest quality products you can.

Customer Relationship Management

Customer interactions, managing sales opportunities, and order-to-cash tracking should be a part of your ERP's integrated CRM module. These integrations enable your sales team to provide customers with a delivery date based on real production capacity, rather than, for example, guessing or estimating delivery. These enhancements can really help improve your customer satisfaction and retention.

Real-World Impact: The ROI of ERP Implementation

Small- to mid-sized sheet metal manufacturers who implement a complete ERP system will generate a recognizable benefit in the first twelve to eighteen months of use:

On average, these organized improvements are:

·     Inventory holding costs declined by 20-30%

·     On-time delivery performance improved by 15-25%

·     Material utilization improved by 10-15%

·     Quote preparation time was reduced by 25-35%

·     Administrative costs decreased by 30-40%

In addition to these measurable benefits, ERP systems provide manufacturers with visibility of data and analytic capabilities needed to know what continuous improvement opportunities to pursue that would be missed without the ERP system.

Selecting the Right ERP Solution

Not all ERP systems are created equal. Sheet metal manufacturers require ERP solutions that address their specific needs, such as supporting the various types of fabrication of sheet metal parts, which include laser cutting, punching, forming, and welding, to name a few.

The right ERP system should help your business grow by being modular (able to be added to your existing ERP system) and integrating with whatever equipment you have now (or plan to buy). Look for ERP manufacturers and vendors who deliver knowledge of industry functions and your equipment (and whose systems have an industry function at the core—as opposed to requiring extensive customization with no fabricator input).

Cloud-based ERP solutions have some specific benefits for growing manufacturers; they provide enterprise capability without the massive infrastructure costs upfront.

Transform Your Sheet Metal Operations Today

In the competitive manufacturing environment today, ERP systems are no longer considered a nice-to-have but a need-to-have for continued operations and growth. I emphasize to manufacturers that the right ERP system will pay for itself because it improves efficiencies, reduces waste, and enhances decision-making capabilities.

If you are ready to increase efficiencies and profitability, please reach out to Softwares in Demand to learn about our specialized ERP solutions designed to transform your sheet metal operations. Our team of industry experts and experienced technicians knows the unique challenges facing sheet metal fabricators, and we can develop a system that supports measurable results for your business.